Will Tesla Powerwall Fail To Live Up To Expectations?

Tesla’s new Powerwall energy storage system is at this juncture incompatible with solar, impractical in other important ways, and a cost-benefit analysis suggests it may fail to live up to expectations set by its enthusiastic promoter.

This view floated by Bloomberg New Energy Finance (BNEF) following last week’s revelation of Tesla’s new 7 or 10 kilowatt-hour residential and larger commercial units flies in the face of otherwise “nutty” positive reception.

Company CEO Elon Musk says it instantly got 38,000 consumer reservations, 2,500 commercial reservations, and could build a new Gigafactory just to build this new product line. He has boldly said the Powerwall is the “missing piece” for a petroleum-free future.

Several financial analysts in turn speculate Powerwall may be more profitable for Tesla than electric vehicles.

With so much momentum already, BNEF too says Powerwall may prove a success but its analysis suggests some may want to think twice about promises it may not live up to.

Will Tesla Powerwall Fail To Live Up To Expectations?

While the concept of the Powerwall sounds ideal – storing cheaper off-peak power or solar energy for use during peak hours – BNEF says the Powerwall isn’t ready to match the hype.

Screenshot via Tesla website

“The Powerwall product that has captured the public’s imagination has a long way to go before it makes sense for most people,” Bloomberg said. “Even in Germany, where solar power is abundant and electricity prices are high, the economics of an average home with rooftop solar ‘are not significantly enhanced by including the Tesla battery,’ according to an analysis by Bloomberg New Energy Finance.”

For starters, SolarCity (the largest rooftop installer in the U.S., with Musk as its chairman and largest shareholder), will only be installing the larger 10-kwh Powerwall right now.

Per unit, the larger Powerwall is cheaper than competing batteries of the same size. But the available backup power is limited.

“The battery isn’t powerful enough to operate a pair of space heaters; an entire home facing a winter power outage would need much more. In sunnier climes, meanwhile, it provides just enough energy to run one or two small window A/C units,” said Bloomberg.

To create a system that’s equivalent to a 16-kilowatt Generac backup generator, eight Powerwall units are required because it can only output 2 kilowatts of continuous power, enough to be maxed out by “a single vacuum cleaner, hair drier, microwave oven or a clothes iron,” observes Blomberg.

The total cost if someone were so included to buy eight Powerwalls could add to $45,000 under Tesla’s nine-year lease – 12 times more expensive than the $3,700 Generac – and otherwise utterly prohibitive.

SolarCity added that the 10-kwh Powerwall is designed to be used solely as a backup power source. Because it’s only built to withstand 50 charging cycles per year, this battery isn’t intended for daily use.

models-powerwall

Which leaves the smaller and less expensive 7-kwh Powerwall. This battery is made for daily use, and can potentially store either solar or off-peak electricity for when you need it.

The problem is that, at least for now, SolarCity won’t install this system. The issue again comes down the to the cost-benefit analysis.

“In the U.S., it’s currently less expensive for residential customers to run off the grid, so SolarCity isn’t currently offering the 7-kwh battery, although according to [SolarCity spokesman Jonathan] Bass, it will in the future,” said Business Insider.

Bass also explained that collecting energy during off-peak hours with a Powerwall similarly doesn’t make financial sense for most of U.S. households.

The concern over the practicality of using a Powerwall system to store solar energy is said to be legitimate considering many plug-in vehicle owners want to be able to recharge using renewable energy sources. And Musk himself stressed the importance of being able to use power from the sun.

SEE ALSO: Beyond Automotive: Tesla Introduces ‘Powerwall’

“We have this handy fusion reactor in the sky called the sun, you don’t have to do anything, it just works – shows up every day and produces ridiculous amounts of power,” said Musk during the Powerwall’s debut event.

If prices for electricity undergo significant increases – either from a boost in utility company chargers or equipment fee for off-grid systems – or the cost of the batteries go down, the cost-benefit of the Powerwall could improve. The upcoming opening of Tesla’s Gigafactory certainly has the potential to lower the Powerwall price.

Even if the cost-benefit doesn’t improve on the Powerwall, Bloomberg suggests that the Powerwall will continue to be a popular product, and indeed Musk has said 38,000 reservations are pouring in.

Economics “won’t stop homeowners from buying Tesla’s new batteries,” said Bloomberg, adding, “Germans are already buying storage systems by the thousands at significantly higher prices.”

Bloomberg